Technical analysis update: Nasdaq 100 (10th January 2022)

Today, the Nasdaq 100 index dropped below its key technical level at 15 538 USD - which currently acts as immediate support/resistance. We think this is a very bearish occurrence and one that can potentially mark the beginning of downtrend for NQ1!. This view is also supported by bearish technical indicators on the daily and the weekly time frames. Additionally, the monthly time frame shows peaking bullish conditions that often coincide with the market top. These warning signs suggest more trouble ahead for the general stock market. Because of that we are very cautious and we will observe the price action of Nasdaq 100 in the following days. We will view the potential failure of NQ1! to retrace back above the key technical level as very bearish. However, if retracement occurs then we will reassess our views.

Illustration 1.01

Illustration 1.01 shows the daily chart of NQ1!. It also shows two yellow trend lines connecting all major lows: Line 1 and Line 2. Price dropped below Line 1 which is very bearish.

Technical analysis - daily time frame
RSI continues to develop bearish structure. Same applies to MACD and Stochastic. DM+ and DM- show bearish conditions as well; ADX continues to increase since 22nd December 2021 which suggests that current neutral trend is turning to bearish trend. This coincides with a price drop below the key technical level. Overall, the daily time frame is bearish.

Illustration 1.02

Illustration 1.02 shows the daily chart of NQ1!. It also indicates evaporation of new buyers as the price attempted to make a new high. Additionally, drop below the key technical level is marked.

Technical analysis - weekly time frame
RSI, MACD and Stochastic are all bearish. DM+ and DM- performed bearish crossover recently. ADX continues to decline. Overall, the weekly time frame is bearish.

Support and resistance
Immediate support/resistance sits at 15 538 USD while major top lies at 16 767.50 USD. Support 1 can be found at 15 273.75 USD and Support 2 at 14 585.50 USD.

Please feel free to express your own ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Your own due diligence is highly advised before entering trade.

Trade active:

NQ1! retraced towards its short-term moving average and then dropped below the key technical level. We continue to maintain bearish stance and we would like to set the short-term price target of 15 000 USD.